PORT ANGELES — City officials have declared Port Angeles' “smart meter” installer in breach of contract after sending a letter detailing a litany of software problems with the remotely-read water and electricity meters.

In a letter sent Thursday to Atlanta-based Mueller Systems, city Public Works and Utilities Director Craig Fulton cited failures on Mueller's part to show their advanced metering infrastructure system, also called AMI or smart meters, can reliably transmit electricity and water usage date to the city's billing system.

“We are particularly dissatisfied that our efforts to improve metering to the city's residents and businesses have been stalled,” Fulton said Friday.

The city entered into the $4.9 million contract with Mueller Systems in December 2010, with all 10,600 electricity meters and 8,500 water meters expected to be replaced by January 2012.

Integration issues between Mueller's software and the city's have plagued the project after 2,080 smart electricity meters and 1,200 smart water meters installed and testing began, Fulton explained.

All of the city's new meters are still being read manually by city staff because of the ongoing software issues, Fulton said.

The city has paid Mueller about $1.9 million so far, mostly for the purchase of the new meters, Fulton said.

A representative from Mueller Systems could not be reached for comment.

The goal of the smart meter project is to replace the city's aging analog utility meters with digital devices that can be read remotely from City Hall, Fulton explained.

The new meters also would allow customers to review their usage and determine when they use the most water and electricity, Fulton added.

The problems prompted the city to bring in West Monroe Partners, a Chicago-based consulting firm, to assess the smart meter system, figure out why the problems are persisting and develop alternatives.

Fulton said the city has not yet been billed for any of the $86,500 contract with the consulting firm, approved by City Council members in October.

Fulton said he expects to present a report from West Monroe Partners on the smart meter project to City Council members at their Feb. 4 meeting.

Fulton said the topic would also likely come up at a Tuesday City Council executive session called at 5 p.m. in City Council chambers, 321 E. Fifth St., to discuss potential litigation with the city's legal counsel.

“Yes, in the executive session on Tuesday, we'll be discussing [Mueller Systems] and more than likely the overall AMI metering system,” Fulton said.

Fulton could not say if it could result in the city taking legal action against Mueller Systems.

“[Those are] discussions that need to happen between Mueller and the city, and I really can't comment on that,” Fulton said.

The contract with Mueller allows the city to work to recoup the money paid to the company if the system has not been put in place according to the contract requirements, Fulton explained.

Some city residents have raised privacy and public health concerns about the smart meters, with between 60 and 70 people attending a September council meeting to speak against the project.

The city has maintained the meters will not harm human health nor violate city residents' privacy.

Both the Clallam County Public Utility District — which serves all areas in the county, including Sequim and Forks, that are outside Port Angeles — and the Jefferson County PUD have electricity meters that can be read via radio signals, but they cannot receive information from public utility staff, and so aren't smart meters.

Fulton said the issues raised in the letter to Mueller Systems did not include residents' concerns but stuck strictly to what Mueller agreed to do in their contract with the city.

The letter to Mueller Systems serves as 60 days' notice the city is legally required to give Mueller to give them time to comply with the contract, Fulton said.

“It is unlikely they will be able to address all the issues within 60 days. At a minimum, they would need to present a concrete way forward,” Fulton said, “something that says, 'Yes, this will work.'”